XP won't allow you to create post install partitions unless you use 3rd party software like Partition Magic. The only partition software included with MS products is FDISK. Of course oonce you partition you have to decide what format NTFS/FAT32. Use Partition Magic and make sure you do all the backups...
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Here is a guide to using the Recovery Console to partiton. As Ronin said, you can't use it to move/resize partions that are in use, only raw space. But you may want to know how to do it when you're first installing Windows as well. http://www.webtree.ca/windowsxp/repair_xp.htm
Like baqai said partition magic, I use it myself and often you dont even need to restart and it will create partitions really quickly without rebooting, the only time you have to restart is when doing stuff to the windows partition.
You can use fdisk too, I think you can create a dos/fat32 partition and then when you go to into xp install fromat it with ntfs which id assume you would use? and go on with the install. I havent used fdisk in a while, but you can run it off a win98 bootup disk which can be found at www.bootdisk.com